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Forum List » Business News and Headlines SEC Filings, Earing Reports, Press Releases  
St. Mary Land & Exploration Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2011 04:56PM
St. Mary Land & Exploration Company (SM) filed Quarterly Report for the period ended 2011-09-30. Highlight of Business Operations:As of January 1, 2011, we elected to de-designate all commodity derivative contracts that had previously been designated as cash flow hedges as of December 31, 2010, and to discontinue hedge accounting prospectively. Accordingly, beginning January 1, 2011, all of our derivative contracts are stated at fair value each quarter. The changes in the fair value of these contracts result in gains and losses, which are recognized immediately in earnings. For the three and nine months ended September 30, 2011, realized cash settlements from our commodity risk management program resulted in losses of $10.6 million and $38.7 million, respectively. For the three and nine months ended September 30, 2011, fluctuations in the fair value of our commodity risk management program portfolio of derivative contracts resulted in unrealized gains of $132.2 million and $108.0 million, respectively.Our basic and diluted earnings per share, for the three and nine months ended September 30, 2011, increased substantially compared to the same periods in 2010. The majority of this increase is due to our net income balance used to derive earnings per share, which includes a gain of approximately $191.4 million related to our divestiture of our operated acreage in LaSalle County, Texas. See Note 3 - Divestitures and Assets Held for Sale, in Part I, Item 1 of this report. Divestitures by nature are considered non-recurring by the Company and are not indicative of future activity. Both basic and diluted earnings per share are presented in the table above. We use the treasury stock method to account for the potential diluted earnings per share impact of unvested RSUs, contingent PSUs, in-the-money stock options, and our 3.50% Senior Convertible Notes. In-the-money stock options, unvested RSUs, and contingent PSUs were dilutive for the three and nine months ended September 30, 2011, and 2010. Basic common shares outstanding used in our September 30, 2011, and 2010 earnings per share calculations reflect increases in outstanding shares related to stock option exercises and vested RSUs. Our September 30, 2011, calculation also includes fully vested and released PSUs. We issued 366,117 and 163,348 shares of common stock during the nine-month periods ended September 30, 2011, and 2010, respectively, as a result of stock option exercises. The number of RSUs that vested and settled during the first nine months of 2011 and 2010 were 72,127 and 57,687, respectively. During the nine months ended September 30, 2011, 206,468 PSUs fully vested and settled as part of the first settlement of this type of award. For the three months and nine months ended September 30, 2011, our average stock price exceeded the conversion price of $54.42 making our 3.50% Senior Convertible Notes dilutive for our 2011 quarter-to-date and year-to-date diluted weighted-average common shares outstanding calculation. The 3.50% Senior Convertible Notes were not dilutive for the three-month and nine-month periods ended September 30, 2010. Currently, our stock price continues to trade above the $54.42 conversion price, therefore we expect our 3.50% Senior Convertible Notes to have a dilutive impact on our fourth quarter earnings per share calculation. Please refer to Note 6 - Earnings per Share in Part I, Item 1 of this report for additional discussion. Marketed gas system revenue and expense. Marketed gas system revenue increased $2.3 million, or four percent, to $56.3 million for the nine months ended September 30, 2011, compared with $54.0 million for the comparable period of 2010. Marketed gas system expense decreased $1.0 million, or two percent, to $51.6 million for the nine months ended September 30, 2011, compared with $52.6 million for the comparable period of 2010. Operating activities. Cash received from oil and gas production revenue, including the effects of derivative cash settlements, increased $269.4 million to $872.3 million for the first nine months of 2011, compared with $602.9 million for the same period in 2010. Cash paid for lease operating expenses increased $22.1 million to $111.0 million for the first nine months of 2011, compared with $88.9 million for the same period in 2010.
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